Plaid Cymru have welcomed a UK government plan to cut pension tax relief to people on higher incomes. But they have reiterated their opposition to the cuts agenda and made clear that their approval for this policy is an exception.
There will be reductions in both the annual amount on which can be claimed, going from £255,000 p.a. to £50,000 p.a. and in the lifetime allowance which can be claimed, dropping from £1.8m to £1.5m.
Plaid Cymru pointed out that the new policy is closer to their own policy, which they promoted at this year's UK general election.
Plaid Cymru, whose name means “Party of Wales” in Welsh, is a socialist party working towards an independent Wales within the European Union.
“Cutting back on the amount of pension tax relief to higher rate taxpayers is clearly the correct direction of travel,” said Plaid MP Jonathan Edwards, who was returned to Westminster for the first time this year.
“£19 billion a year is spent on tax relief for pensions, with the government under-writing the amount of money that people save for pensions,” he explained, “Around half of this money goes to higher rate tax-payers, who are able to claim for their full 40 per cent or 50 per cent, whereas standard rate tax-payers are only able to claim back 20 per cent”.
He emphasised Plaid's belief that, “Higher earners should not have additional support above and beyond what other taxpayers receive to save for their retirement”.
He said that “ordinary taxpayers, struggling to get by” have been obliged to fund “gold-plated pensions” for those on higher incomes.
But he added that “as with all announcements of this type, the devil is in the detail”, making it clear that he will be watching the government closely to check that the proposals are implemented fairly.
This is a rare example of a cut welcomed by Plaid. Edwards described it as “far better than the savage cuts to public services that the ConDems are inflicting because of their other policies”.